There is no limit on the number of traditional individual retirement accounts, or IRAs, that you can establish or contribute to. However, you must have eligible compensation, which basically includes wages, salary, or self-employment income for any year you contribute. That leaves out income from things like pensions, annuities, interest, dividends and rentals.
In addition, you can't have reached age 70½ by the end of the year in which you establish (or pay into) a traditional IRA. However, you can establish a Roth IRA at any age, as long as you have eligible compensation and meet the income requirements. (See, Roth IRAs Tutorial.)
IRA Contribution Limits
Keep in mind that regardless of the number of IRAs you maintain, you still cannot contribute in total more than the annual contribution limits. These are:
- $5,500 if you are under age 50
- $6,500 if you are age 50 or older (the additional $1,000 is known as a catch-up contribution)
You are allowed to contribute up to 100% of your compensation up to $5,500 (or $6,500 if you are 50 or over). And all regular IRA contributions must be made in cash (which includes checks), not in securities. You can divide up the permitted contribution among your IRAs or contribute the whole amount to one IRA.
If your spouse has little or no income, you are allowed to make contributions on his or her behalf – commonly known as spousal IRA contributions. The same rules apply as for traditional IRA contributions. Your spouse will have her or his own IRA account, since IRA accounts are not allowed to be held jointly. This allows a family to double the amount of money set aside for retirement. (Note that should you divorce, the spousal account belongs to the spouse whose name is on it, not the spouse whose earnings provided the contributions.)
Here are the requirements for opening a spousal account:
- You must be married and file a joint tax return
- You must have eligible compensation to make contributions
- The total contribution for both you and your spouse cannot be more than your taxable compensation reported on your joint tax return
The Bottom Line
If you decide to establish multiple IRAs, remember that annual maintenance fees may apply to each IRA. These fees can average from $50 to $100 per year. Fees can eat into your returns, so it is important to be knowledgeable about all of your retirement account fees.